Strausz, Roland: Mediation in Situations of Conflict
World Conference Econometric Society, 2000, Seattle

Kay Mitusch, Free University of Berlin
Roland Strausz, Free University of Berlin
Mediation in Situations of Conflict
Session: C-13-10  Wednesday 16 August 2000  by Strausz, Roland
We study the effectiveness of mediators in situations of conflict. In a game of cheap talk a principal may employ a mediator whose task is to gather information and make non--binding proposals. We show that mediators facilitate information transmission and are helpful if and only if the likelihood of a conflict of interest is strictly positive but not too high. Mediation increases the amount of information that can be induced in equilibrium and is helpful when full information revelation is not feasible. The insights of this paper extend to general models of mechanism design with imperfect commitment of the contract designer.
Submitted paper full-text in .pdf


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